New Overtime Rule Blocked by Federal Judge

In a surprising decision, a judge in the U.S. District Court for Texas not only granted an injunction to 21 plaintiff states that sued to block the U.S. Department of Labor’s overtime updates set to take effect December 1, 2016, he applied his ruling to all 50 states. The result is that, at least for now, employers in Massachusetts need not update pay scales. As long as executive, administrative or professional employees make at least $455/week — the minimum pay requirement now in effect — they will remain exempt from overtime pay requirements.

Judge Amos Mazzant reasoned that the Department of Labor (DOL) could not update the minimum salaries for executives, et. al., because Congress clearly intended the exemption to turn on a duties and not a salary test. Each of the three affected categories or workers carries with it specific criteria for determining applicability, commonly referred to as duties tests. While Judge Mazzant called the Congressional intent in this regard to be so clear that it blocks the DOL from increasing the minimum salary requirement, he did not address the question why or how a DOL regulation has, apparently properly, for years included a minimum salary component for executive, administrative and professional worker overtime exemptions. Indeed, the new DOL rule that was to take effect December 1 seeks to update the minimum salary from $455 to $913 weekly and to implement an automatic pay adjustment mechanism going forward. The court’s November 21, 2016 decision in State of Nevada v. U.S. Department of Labor leaves the old threshold in place.